Hotel projects stalled in doubt Convention planners reluctant to commit before ground is broken

November 01, 1998|By June Arney | June Arney,SUN STAFF

The Society of Toxicology needs an answer fast.

The society's headquarters in Reston, Va., must know in 11 days whether Baltimore's Grand Hyatt will actually exist if they hold their convention in the city in February 2003 or early the next year.

In a nutshell, that is the city's dilemma. Although three multimillion dollar hotels -- with 2,200 new rooms -- have been promised within the next four years, there is no certainty that all will be built. Without at least 1,100 rooms, the city can't lure new and bigger conventions worth millions of dollars.

"They want it in writing that the hotel is going to be there," said Carroll R. Armstrong, president and chief executive officer of the Baltimore Area Convention and Visitors Association.

"There is a whole set of other customers who won't even talk to us until the hotels are well on the way or at least the ground is broken. They say, 'Great, Carroll, call us when you've got the shovel in the ground.' "

Many big conventions are scheduled five years in advance, and the people who plan them don't like to roll the dice.

"I do use a lot of hotels prior to completion, but I can't imagine booking at a proposed hotel not knowing that they had broken ground," said Margaret Foley-Easter, convention and meeting director for Distribution America, a hardware distributor based in Des Plaines, Ill.

As planners make final arrangements for events four to seven years away, ground has yet to be broken at any of the three downtown Baltimore hotels slated to be open by 2002.

Those hotels and the recently expanded Baltimore Convention Center are supposed to transform the city's profile as a place to meet, allowing the center to compete for conventions previously out of reach.

"In order for BACVA to maximize the convention center and the opportunity this expanded convention center has provided, we need to move on with hotel construction," Armstrong said. "The booking window of 2002 to 2005 is closing rapidly."

When a municipality loses out on a booking, it can be four to six years before the convention rotates back to the same part of the country, allowing the city another chance to bid.

Despite the frustration of the Baltimore delays, such problems are not unique, say hotel industry experts.

"It's totally characteristic of what's happening everywhere," said Karen Rubin, senior vice president with HVS International in Mineola, N.Y. "It's a moment of total stasis. Everyone is holding their breath to see what will happen."

In fact, the situation has been far more drastic outside Baltimore.

The financing factor

"We have all of these hotel developers pulling projects," said Rubin, who has worked as a consultant on one of the three proposed Baltimore hotels. "While interest rates have declined, the spread for hotel loans is up. That means debt is a lot harder to get than it was three months ago."

Companies that were pouring money into a booming hotel industry are no longer as willing to do so.

Last week, Baltimore developers announced an agreement that unifies under one ownership and management the existing Hyatt Regency and the proposed Grand Hyatt, to produce a nearly 1,400-room entity.

"It gives us another important tool for attracting conventions here to be able to offer a single complex with more than 1,000 rooms," said Mayor Kurt L. Schmoke. "That will really help us as we look at some of the larger conventions."

But financing still must be secured. And some analysts say that the uncertainty of capital markets and the lower stock prices of hotel companies may increase the challenge.

Three proposed hotels

The three large Baltimore hotel projects are:

The $150 million Grand Hyatt, backed by Baltimore lawyer and Orioles majority owner Peter G. Angelos, was planned for opening adjacent to the convention center, in the block bordered by Pratt, Howard, Camden and Paca streets, in 2001. But delays may push it to mid-2002, according to one industry expert. The Grand Hyatt with its 850 rooms, when combined with the existing Hyatt Regency, will provide nearly 1,400 rooms.

The Wyndham Inner Harbor East, being developed by Baltimore businessman John Paterakis Sr., would rise at the northeast corner of East Falls Avenue and Aliceanna Street, just south of Little Italy on the banks of the lower Jones Falls. It is expected to break ground by the end of the year -- nearly three months later than planned. Completion of the $134 million, 750-room hotel is slated for the autumn of 2000. But Patriot American Hospitality Inc., the hotel's owner, is facing a cash crunch. It must repay $310 million in financing by year's end and another $400 million in bank loans in January.

The $124 million Westin, at the former News American site

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